This Fund Gives Exposure to Large-Cap Growth Companies


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This Fund Gives Exposure to Large-Cap Growth Companies


By: Jim Woods

The Vanguard Growth ETF (VUG) aims to select mid- and large-cap U.S. companies that exhibit strong growth characteristics.

“Growth stocks” usually refers to companies that are likely to experience higher future revenues and earnings at a faster rate than the industry average. As a result, growth stocks tend to outperform during a market uptrend.

This fact was clearly illustrated in 2017, as the information technology (IT) sector returned an impressive 35.51% to top the gains of all other major sectors, including consumer discretionary (19.92%) and real estate (9.07%). The overall S&P 500 index returned around 19% for 2017.

VUG employs a passive, buy-and-hold approach. It has $31.51 billion in assets under management and an average daily trading volume of $88.63 million. This makes it a very liquid fund. The exchange-traded fund’s (ETF) operating efficiency is reflected in its low expense ratio of just 0.06%. Low expense ratios are a hallmark of many Vanguard funds.

The fund pays a quarterly distribution and has a distribution yield of 1.22%. Its most recent payout of $0.475 on December 27, 2017, was an increase of 15.6% over the previous distribution.

The chart below clearly shows that VUG went nowhere but up in 2017, with its share price increasing nearly every month. The fund touched an all-time high of $142.50 in December and returned about 29% for 2017. Zacks Investment rated VUG as one of the top growth funds of 2017 and has given it a “strong buy” rating.

While VUG is very focused on its goal of investing in large-cap growth companies, the fund spreads its holdings over a basket of 300-plus stocks, with none accounting for more than 7.2% of the fund’s total assets. Roughly 27% of the fund is invested in technology, 20% in consumer services and 12-13% in health care, financials and industrials.

VUG’s top five holdings are: Apple (AAPL), 7.20%; Amazon.com (AMZN), 4.34%; Facebook (FB), 3.80%; Alphabet Inc. A (GOOGL), 2.79%; and Alphabet Inc. C (GOOG), 2.73%.

If you are seeking a straightforward way to get into some of the biggest and best growth stocks, consider looking into Vanguard Growth ETF (VUG).

 

And for more recommendations of the very best ETFs to supercharge your portfolio, click this link to check out – Successful Investing.

About the Author: Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.  He is the editor of Intelligence Report, Successful Investing and Weekly ETF Report. Jim's books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.

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